What are the downsides of investing in HMO’s in Leeds?

If you’re asking yourself this question, congratulations, this is a great question to ask! If you don’t explore this before buying or converting a HMO, you may be in for a costly ride! You won’t find this content in any training course and in few books, yet I think it’s very important to understand this.

Have you really got your numbers right? When looking at your investment numbers you will generally have a spreadsheet which totals up all of your costs, and then all of your income. Basic calculations of income against costs will give you your investment numbers - yield, ROI, cash flow etc. When you compare these to buy to lets your eyes will widen and your heart will start to beat a bit faster. But don’t get too carried away yet. Most people under estimate their costs at this stage. The greatest margin for error here is your refurb cost. Even if your trusted builder has priced up the job, even his experience can’t tell him what he has yet to find. You will need a contingency figure here. 10% would usually cover it, but 20% would be prudent. The next thing investors are under estimating at the moment here is voids. If your voids contingency looks like just 10%, you may need to think again! Which leads me on to me next point.